Bob Choate has sold restaurant equipment for years, so he already knew there was no such thing as a free lunch.

Now, much to his chagrin, Choate has found there's no such thing as a free doughnut, either.

Choate, 56, of Houston last fall won a year's supply of coupons from Shipley's Do-Nuts as one of the lucky prize-winners during Astros Fan Appreciation Day at Minute Maid Park.

"I went up to the customer service window, fat, dumb and happy, and signed a form and picked up a fistful of certificates, each good for a free doughnut or a dozen doughnut holes and one free cup of coffee," he said.

But last month, much like the Grim Reaper, the punch line to his prize landed in Choate's mailbox: an Internal Revenue Service Form 1099, informing him that he owed taxes on $927.61 in "free" coffee and doughnuts.

"Right," Choate said. "Fan Appreciation Day. We appreciate you, oh, and by the way …"

Choate, mind you, is no rube. He knew about Form 1099s, and he presumed there would be some tax liability for his edible appreciation. Nearly a thousand bucks, however, exceeded his expectations considerably.

However, Roger Aksamit, an attorney with Thompson & Knight who is board certified in tax law, said Choate's plight demonstrates one of the iron-clad rules of the tax code.

"If you get paid in doughnuts," Aksamit said, "you've got to pay in dough."

The federal tax code states that prizes and awards are subject for taxation "at their fair market value." If prizes are valued at more than $600, donors are required to issue a Form 1099 stating the value of the gift or prize.

Shipley's charges 83 cents for a glazed doughnut, $1.25 for doughnut holes and $1.25 for a small cup of coffee, so the maximum value per coupon of about $2.50, multiplied by 365, comes to approximately the $927.61 on Choate's 1099.

"The IRS assumes the coupons are going to be used and that they have a fair market value," Aksamit said. "Of course, fair market value and what you or I may think that something is worth can be a different number."

Two months into the new year, Choate said he thus far has used eight coupons. He gave about 30 to his son, who gave them as a birthday present to one of his teachers.

That means he still has more than 300 coupons to go – or 72,600 calories, presuming 242 calories per doughnut, and 1,800 ounces of coffee if he's to get full value for his prize from the Astros.

Choate, however, has resigned himself to the fact he's not going to get maximum bang for his tax bucks. He said he may give some coupons to drivers for a delivery company that works with his employer.

Aksamit said Choate also could use the tax code in his favor by donating coupons to charity and claiming the value of the coupons as a deduction on his tax return.

Even if Choate never uses all the coupons, which have no expiration date and, thus, can be used beyond this year, Aksamit said the IRS will demand its dough.

"The minute you sign to accept the award, you get tagged," he said. "The only option is not to accept the award."

Several high-profile prize winners have fallen victim to the tax code, including Survivor winner Richard Hatch, who was convicted in 2006 of failing to pay taxes on his $1 million prize and sentenced to 51 months in prison.

Also, audience members for Oprah Winfrey's show in 2004 were hit with tax bills of up to $7,000 each after Winfrey gave each of them new cars. Winfrey has continued giveaways, including 275 viewers who recently were told they will receive 2012 Volkswagen Beetles, but Volkswagen agreed to foot the tax bills.

The Shipley's promotion is one of several offered by the Astros that exceed the $600 IRS limit, said team spokesman Jay Lucas. A Texans spokesman said the team also has offered fan appreciation prizes in excess of $600.

As for Choate, meanwhile, "I don't feel very appreciated. If I had known this was going to cost this much, I wouldn't have accepted. It was pretty poorly handled.

"I don't think (the Astros) thought a lot about their customers when they had their Fan Appreciation Day. I know I'm not going to get the full taxable benefits out of this, that's for sure.".